Iowa Broker Law: The State Portion

What the Iowa portion actually is

PSI delivers the Iowa broker examination under candidate bulletin 120, revision 12/8/2025: 115 scored items in 180 minutes, scored as two independent tests you must both pass.

The national portion carries 75 items but 80 points — not a typo and not a scaled score. PSI scores it by points because some national broker items are worth two points; the Iowa state portion is one point per item, so 30 points means 30 correct. The regulator is the Iowa Real Estate Commission, created by Iowa Code section 543B.8(1) within the Department of Inspections, Appeals, and Licensing (2024 Iowa Acts ch. 1170).

The finding: PSI publishes no subtopics for Iowa

There is no lettered subtopic list. The bulletin prints the twelve area names with their Salesperson and Broker item counts in a bare table and nothing more — no A/B/C breakdown, no sub-bullets, no statute cited area by area. Every subtopic array in our Iowa outline is empty on purpose. If a course shows you Iowa "subtopics," they came from somewhere other than PSI.

Read this before any rule number

Pursuant to 2023 Iowa Acts SF 514 the commission's rules were editorially transferred: IAC agency 193E chapters 1 through 22 are now IAC agency 481 chapters 2001 through 2022 (IAC Supplement 6/10/26). The mapping is +2000, with no renumbering inside a chapter — old 193E—11.1 is new 481—2011.1 — and the substance did not change. The trap is PSI's: the 12/8/2025 bulletin still lists "Iowa Administrative Code (193E)," so the exam's own materials use numbering the code no longer uses. Learn both; this book cites 481.

I. Licensing Requirements — 2 of 40 items

Section 543B.1 makes a license mandatory before even a single act as a broker for compensation. Broker eligibility is one number pair: section 543B.15(7) requires sixty contact hours of commission-approved education within the twenty-four months before the broker examination, in addition to the salesperson prelicense course, plus twenty-four months as a licensed salesperson actively engaged in real estate immediately preceding application, or substantially equal experience. Section 543B.20 requires the broker exam to be more exacting than the salesperson's — the statutory reason Broker Responsibilities is Iowa's heaviest area.

The trap is the auctioneer. Section 543B.7(5) lets a non-licensee auctioneer set the time, place and method of an auction, advertise it briefly and cry the property — but not show property, host open houses, discuss contracts or hold deposits, and the broker providing brokerage services must be present. An auctioneer who answers a bidder's question about the purchase contract has left the exclusion.

II. License Maintenance — 4 of 40 items

Iowa runs one shared calendar, not personal anniversaries. Rule 481—2003.3(2) issues broker, salesperson, trade name, branch office and firm licenses for a three-year term, counting the remaining portion of the year of issue as a full year, and rule 481—2016.4(1) fixes expiry at December 31 of the third year.

Section 543B.28 lets a licensee who misses that date renew within thirty days, and rule 481—2003.5(2) fixes the penalty at $25 for an application received after midnight December 31 but before midnight January 30. After January 30 it is reinstatement under rule 481—2003.6: the renewal fee plus $25 for each partial or full month since expiration, so a license applied for on March 14 costs the fee plus $75. (Verify current fee amounts.) There is no grace period for practice, and a lapsed broker's authority terminates the authority of every salesperson assigned to that broker. Rule 481—2003.5(4) is the soft landing: a timely, properly paid application that does not report the required continuing education is renewed in inactive status rather than denied.

Errors and omissions insurance is a condition of licensure under section 543B.47 for every licensee except inactive ones. Rule 481—2019.2(4) sets group minimums at not less than $100,000 per claim and $100,000 annual aggregate; a firm umbrella policy carried independently needs aggregates of at least $250,000 for two to ten licensees, $500,000 for eleven to forty, and $1,000,000 for forty-one or more. Rule 481—2019.3(10): self-insurance does not comply. Proof must be furnished within twenty calendar days of a request (section 543B.47(6)). The trap is scope — the duty is not limited to designated brokers, and firm size affects only the umbrella aggregate.

III. Disciplinary Actions — Suspension, Revocation and Voluntary Compliance — 4 of 40 items

Section 543B.29(1) reaches fraud in procuring a license, professional incompetency, knowingly misleading representations or unethical conduct harmful to the public (proof of actual injury is not required), and noncompliance with the insurance and trust account requirements. Section 543B.34(1) adds substantial misrepresentation, acting for more than one party without the knowledge of all, and paying commissions to unlicensed persons.

Section 543B.29(4) is mandatory and exact: a license shall be revoked following three violations of section 543B.29 or 543B.34 within a three-year period. Not "may," not four complaints. Rule 481—2018.14(1) lists lesser sanctions, including a downgrade from broker to salesperson license and civil penalties capped by section 543B.48 at $2,500 per violation; against an unlicensed person the penalty is up to the greater of $10,000 or ten percent of the sale price (section 543B.34(3)). A complaint is not a violation: a file may close with a confidential letter of caution, which rule 481—2018.11(3) says is expressly not disciplinary action.

The "voluntary compliance" half is where points go. Rule 481—2018.14(3) lets the commission accept a voluntary surrender to resolve a pending contested case or investigation — but not a pending investigation unless a statement of charges is filed with the order — and a voluntary surrender is disciplinary action, published like any other disciplinary order. It is not the quiet exit a licensee usually hopes for. Rule 481—2007.3 governs the aftermath: associated licensees go inactive unless they transfer; agreements are canceled and may not be assigned without written consent; pending closings pass to another broker, an attorney or an escrow company with the written approval of all parties; and all advertising, including signs, must be removed or covered within ten calendar days.

IV. Real Estate Education — 2 of 40 items

The broker prelicense sixty hours of section 543B.15(7) is approved across nine subjects, of which Real Estate Office Organization, Administration and Human Resources is 12 hours and the other eight are 6 hours each. Continuing education under rules 481—2016.4(2) and 481—2003.4(2) is 36 hours per three-year renewal period: an 8-hour law update, a 4-hour ethics course, 24 elective hours. An "hour" is 50 minutes of instruction, and no more than 24 of the 36 may be distance or online.

The trap is carryover. Excess hours carry at up to 50 percent of the requirement — a maximum of 18 hours — and no carryover applies to the mandatory eight-hour law update or the four-hour ethics course. A broker who banks 18 hours still sits both named courses fresh; the bank covers electives only, and rule 481—2016.6 repeats the ceiling for a licensee making up hours to reactivate. Documentation is kept six years, and a false affirmation is prima facie evidence of a section 543B.29(1) violation.

V. Trust Accounts — 4 of 40 items

A broker in the practice of depositing trust funds keeps a common trust account at a federally insured depository institution with the word "trust" in the name. The deposit clock is the most-tested sentence in the area. Rule 481—2013.1(1)"a" requires deposit no later than five banking days after the date on the document showing the last signature of acceptance of the offer to purchase, rent, lease, exchange or option, unless the contract specifies otherwise. Two details decide items: the clock starts at the last signature of acceptance, not when a salesperson takes the check, and the contract may vary the time.

Section 543B.46(4) bars commingling with one exception: up to $1,000 of the broker's own funds, specifically identified, for bank service charges, any shortfall corrected within 15 calendar days of the bank statement's closing date. Iowa's genuinely unusual rule is interest: section 543B.46(1) requires the account to be interest-bearing and sends the interest quarterly to the treasurer of state and on to the Iowa finance authority for the housing trust fund established in section 16.181, unless buyer and seller agree otherwise in writing; "the broker shall not benefit from interest received on funds of others." Records must permit monthly three-way reconciliation of the general ledger with the bank balance and the individual ledgers (rule 481—2013.1(6)"a"(3)).

Rule 481—2013.1(7) requires a broker holding a disputed deposit to keep holding it until a written release from all parties, a final court judgment, a final binding mediation decision, or the filing of a civil action; rule 481—2013.1(8) adds a good-faith safe harbor after 30 days to a buyer whose contingency failed, or after six months to a seller where the buyer failed to perform, each only after 30 days' written notice by certified mail. Rule 481—2013.1(9) is the trap and is absolute: the broker may never withhold any part of the earnest money when a transaction fails, even if a commission was earned.

VI. Contracts — 5 of 40 items

Almost all of this area is section 543B.56A and rule 481—Chapter 2011. Read the current composite of section 543B.56A(3), because it was rewritten three times in two sessions and that alone is why sources disagree. It now requires a brokerage agreement "signed by both the broker and the client prior to the broker listing any property for sale on behalf of a seller, or before showing a property to a buyer, or if no property is shown to a buyer, before making an offer on a property on behalf of a buyer" — and exempts from the buyer-side requirement customers attending an open house or auction, a potential buyer of a property of more than four dwelling units, and property not intended for human inhabitance.

The showing trigger is the practical one: a buyer's agent in Cedar Rapids who meets a prospect at a listed house and unlocks the door already needed a signed agreement. Rule 481—2011.1 requires every brokerage agreement to be in writing, to state the compensation with a disclosure that it is negotiable and not set by law, to carry all parties' signatures, and to have "a definite expiration date not to exceed one calendar year in length from the effective date, for residential properties." Rule 481—2011.5 lets a protective clause survive expiration only if the broker delivers the protected names in writing before expiration.

Net listings are barred outright. Rule 481—2011.1(5) provides that no licensee makes or enters into an agreement specifying a net sale price to the owner with the excess going to the broker, and declares that doing so is unprofessional conduct and a violation of the license law. If a Des Moines seller offers to let you keep everything above $250,000, the answer is no — and neither disclosure to a cooperating broker nor a separate signed consent cures it, because making the agreement is the offense.

A correction you will not find elsewhere. Rule 481—2011.1(5) supports that prohibition by cross-referencing two Iowa Code subsections, and neither cross-reference fits the current statute — one points to a subsection number that does not exist in the section named. We deliberately do not reprint those cites; a bad citation is how a candidate ends up arguing a subsection that is not there. The substance is what the exam tests.